tv First Business FOX December 31, 2009 5:00am-5:30am EST
how much is that bottle of bubbly going to cost you? a look at pricing trends in the alcohol industry. plus the growing popularity of digital readers. the threat they pose to book stores and the rest of the publishing industry. and where to expect the biggest return for 2010. plus pitfalls to watch out for in the new year. we get some answers from a pro. that's all ahead on this edition of first business. $ >> good morning, everyone. thanks for joining us. as we head into the new year's holiday, americans seem to be on edge. on wednesday the nasdaq stock exchange building was evacuated because of a suspicious vehicle outside. that turned out to be a false ahad lamar, but the security scares that we've seen over the past week or so are really not rattling investors at all. with the stock market still trading close to a 2009 high. >> it's been a terrific year
for the market. people might want to think about the profits for your favorite charities. today it the last day to make the donations. >> and gas prices are on the rise. the national price is above $2.60. this as oil is closing in on 80-dollar a barrel mark. >> time now for trader talk. we've got matt shapiro of mws capital. matt, after an attempted terror attack on a plane earlier this week, even a security scare at the nasdaq stock exchange, it really doesn't seem to be phasing investors too much. >> yes. not really doing anything. and here we are hopefully we have a little quiet finish to the year this morning, beejal. >> and let's talk about protecting profits now, matt. after a 60% ra raise in the s and p 500 since the march lows, what's the best way to keep the gains? >> well, i mean, if you want to protect your profits, you can certainly come into the options market. if you look at the viks. volatility is very low, so you can do that. but you know me, beejal, i'm
a big time, long-term investor and you make money in the stock market on economic growth and economic recovery. and that's clearly what we're looking for in 2010. so i'll bullish, holding long-term, collecting dividends and i like many sectors here. >> okay. let's talk more about your strategy for 2010. so you're definitely not taking profits on stocks in the new year, you're holding on for the long-term. >> absolutely. you know, i have a core of big blue chips like proctor and gamble, u.p.s. yesterday said things were i am provenning in terms of shipping. and look at those still beaten down sectors like the financials, even real estate investment trusts, i think those can do really well in 2010. >> so would you consider adding to your long positions on dips in the stock market in nut year? >> absolutely. beejal, are we even going to have them? it's been so quiet, even in the s and p a hundred, people are thinking 2010 is
going to be very quiet with very little volatility. certainly there will be storms that come through. take advantage of them. i will be buying stocks. >> thanks so much for your insight, matt shapiro of mws capital. the u.s. government is expected to announce in the coming days another bailout package for gmac, the finance arm for general motors. according to routers, gmac could get up to $3.5 billion in additional aid, that's siting an unknown industry source. gm has already received more than $12 billion in taxpayer funds since last year. some analysts think the company's mortgage assets are what's keeping it from reaching profitability. gmac realized it needed more cash after the treasury's stress test earlier this year. on thursday, president obama is expect to go get preliminary findings from a review of the nation's security systems. he ordered the review earlier this week following the attempted terrorist attack on a northwest
airlines flight over the christmas holiday. the president said the investigation will focus on the terrorist watch list system and air travel screening. he also says more comprehensive formal recommendations for improvement will be completed in the coming weeks. the president called the incident mix of human and systemic failures that allowed a terror suspect to board a u.s. airliner. the suspect's father says he warned u.s. intelligence officials in africa about his son's extremist views weeks ago. president obama said the information never got distributed, so the suspect's name could be placed on a no fly list. as 2009 winds down, you may be trying to figure out how to toast in the new year on a budget. you're not alone. sales of champagne are fizzling as park willing wines from other regions are bubbling up. it's called champagne because it's produced exclusively in the champagne region of france, but over
the past year sales of the chichi drink are reportedly down 30% or more. craig perman of perman wine selections in chicago says people with champagne taste have been switching over to lower priced sparkling wines from spain, italy and california. >> i think sparkling wine sales around new year's have always been very strong. maybe a little stronger this year because of the recession. >> also, the strong euro versus the dollar is driving up the price of goods importd from europe. and that includes champagne. >> right now the dollar isn't doing so hot, so that has a huge impact. it really does. prices can soar 10 to 20 to 30 percent, but you also have to remember that people are buying sparkling wine and champagne maybe six months to a year in advance. >> perman says wholesalers try to keep costs steady. right now champagne prices start around $35 a bottle and go up. for sparkling wines it's
around eight dollars. there's a wide difference because champagne has its own special taste. >> there is a difference. there's usually more complexity, more acidity. >> if you are yook looking for a great sparkling wine, perman says here's what you do. >> you're going to want to ask about dryness levels because there are brut style, which is dry, and stuff like extra dry, which is actually a little bit sweet. >> perman also reveals an insider secret. at every price point he says there's a good quality sparkling wine that suits your fancy and your budget. so don't be pressured into an up sale. >> just go in, find the small retailer and say hey, you know, this is about the price point that i want to spend. what can you recommend? >> then you can pop the cork and toast to you for being a savvy shopper with high brow style.
even bubblelies from california are popular right now. >> according to wine lovers out there, what are some other tips? >> perman says don't get caught up with brands that are heavily marketed. meot may be a wonderful champagne, but they have been feeling competition from sparkling wine over the past few years. so you're now seeing a lot of heavy marketing going on in the industry. >> thanks, angie. coming up on the economic calendar for thursday, we've got jobless claims. and on jan 1st, new year's day, all the markets are closed. straight ahead on first business, the growing popularity of digital readers. should big book stores be afraid. >>afraid? and coming up the market outlook and where to see the biggest returns 2010, ne
>> and now for another perspective on the financial market. let's bring in lincoln ellis of the linn group. let's talk about your market outlook in january. what do you think is going to drive the stock market? >> well, you know, you could see the typical sort of january effect and that is new fund flows coming in from year end bonuses, 401 k plans, pension plans reallocating, that should produce both new levels of
volatility, the types that we've seen in january have to do with lower volumes, but i think you will probably see some volume activity and probably end the month of january slightly up. >> yeah. let's talk more about the volatility because it's been such a quiet few months in the markets. to what extent do you think we could see a more volatile market? >> really i think you would probably see expanded ranges of volatility. this sort of easy money, so to speak, has been made, and there will be pitfalls along the way in 2010 that we both expect and don't expect. the fed taking away the mortgage-backed program. interest rates moving higher later in the year. but volatility will reign much more so than it has certainly over the last 60 days. >> okay. let's switch gears to the biggest returns. where do you think investors can expect the best returns in 2010? could it be in stocks, comomties, maybe the grain market or something else altogether? >> i think two words for investors if they can find a
way to do this, particularly retail investors it will be more difficult, but private equity is probably where the big returns will be and not in developed markets, but in emerging markets and in china in particular. people -- there are new market opportunities around the world. there's a lot of money on the sidelines, and it's not going to go back into the public markets. it's going to seek private, smaller, more venturelike opportunities. >> but what about opportunities for the individual investor? it's kind of hard for us to invest in private equity. where would you say we should look to? >> yeah, i know, absolutely. if people could sometime late in the first quarter, beginning of the second quarter, begin to look at short treasuries. we think that that might be an interesting trade. there's probably a chance here actually after the first quarter to be short equities around the world, as valuations we think will probably be stretched and correlations across asset
classes still fairly high. >> all right. let's talk about pitfalls in 2010, something you mentioned erwi earlier. what investments should we definitely stay away from in 2010? >> yeah. this is a very interesting one. you don't want to be long, sovereign debt, both credit concerns and the clear need for governments to continue to fund ever expanding balance sheets and still anemic economic recovery. you definitely want to stay away from sovereign debt. >> what about the threat of a double dip recession? is that over yet or not? >> i think it probably is in terms of anything that would be substantial or severe. but i think a real sort of anemic kind of economic growth, our real outside surprise for 2010 is some sort of major significant geo political issue. probably an act of terrorism unfortunately that does send
some kind of tremor across all asset classes. that's what we're actually looking for and concerned about. >> let me ask you about commercial real estate. could it become a bigger problem? >> it will continue to become a bigger problem. remember, it's only probably one-sixth to an eighth of the size of the residential market, so it won't reverberate as loudly and the dips that it does produce in the economy will be rebounded from a little bit faster than the residential space, but it will continue to be an issue, not just in 2010, but bigger as we proceed through 11, 12 and 13 as there are huge amounts of balloon payments due, particularly in 13. >> all right. we'll be watching it as always with lincoln ellis. linn group. we appreciate your time. >> you bet. still ahead, digital readers continue to fly off the shelves. could they drive bo stores out of the business? plus the impact on publishing companies, up next.
body rested. stress gone. mind sharp. because unisom gave you deep restful sleep all night. morning early birds. unisom. good night. good morning. >> digital readers are selling so fast, companies that make them can barely keep up with the demand. technology experts say the e readers are a big enough force to change the world of publishing and book stores. earlier we spoke with joel goldhar, professor of operations and technology management at the illinois institute of technology. >> so amazon.com recently said its kindel is setting new records. sony's is in short supply. what does this level of demand say about the trend of digital readers? >> well, it says that the
demand for book and reading isn't dead and that the easier you make it to read a book and the easier you make it to buy a book and the cheaper you make it to acquire that book, the more people are going to buy books and read them. >> let's talk about the pricing of these e books in the future because traditional books range from $15 and up. how much of these e books going to be? >> i think we can predict that the price of the e books, many are now free on kindle. they're going to go to -- the pricing is going to approach the cost of serving another customer and once you're publishing electronically, all of your costs are sunk, all of your costs are fixed and the cost of serving another customer once they dawt bawt the kindle or the e book is close to zero. >> what about the impact this trend will have on large book stores that are publicly traded like barnes and noble and borders and the impact of their bottom line? >> i think large book stores will have a big problem unless they become or continue to become social centers for people who want a snack, read the newspaper.
some people are still going to always like books. they always like the feel of it. some things that are really -- my guess is that eventually really important ideas are going to be in hard copy as opposed to the other way around. >> and what about the smaller book stores? >> the smaller book stores, that's always a market for service, just like a travel agent. a bookstore owner that knows you, knows what you like, can cut through, and whether they give it to you in hard copy, whether they give it to you in an electronic copy isn't going to matter. you're paying them for knowing your needs and knowing out there what's available and making the match between who you are and what you like. you have a couple of hours to sort through stuff on amazon, look at the table of contents, read the sample chapter, you can do it yourself, but now you're replacing the cost of the book with the cost of your time. >> and what is this trend of e-readers do to publishers?
>> i think publishers, depending on what they do, publishing is more than -- certainly is -- in printing it's guaranteeing the quality of the book. it's working with the author. it's helping the author put things together properly. in fiction, i think publishers will still be publishers, except they'll be fighting to prevent copyright violations, prevent unauthorized copying. they still don't know whether you can treat an electronic book the way you do a real book. i shouldn't use that language, but that's the confusion we'll have. i can loan you a book that i bought, i can loan it to other people, the library can have it. electronically i can loan it to you faster and i never have to get it back. >> and certainly this eliminates the cost of distribution. >> distribution costs go away. but also distribution has a value of people couldn't get your book without paying for it. i think they're going to be in trouble in non-fiction and in places like textbooks
because any author can independently publish. you can do that now on a website. you can do it through a regular computer. this is just going to make it easier. amazon already makes it easy for independent publishers, something called hulu, i think, is in independent publishing. if you trust the author to be giving you the right information. publishers are going to be in the business of packaging information you can trust. >> all right. lots of changes ahead coming with the e-readers. thanks so much for your insight. joel goldhar, professor at the illinois institute of technology. and still to come, the year end wrap-up of the dow. we head over to the chicago options exchange for chart
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>> the dow has gone from the 67,000 level up to 10,000. are you advised by that? >> i definitely am. it's been an impressive rally this year. back in march when we hit the lows of 6500, since then we're up over 60%. we're happy right now if you're one of the lucky investors who was able to get into the dow at that point. >> as you know the ride was interesting. we had a lot of upward movement, but at the same time there were some fall back days there, mike. and a lot of traders saying there's no way the dow can go higher and it just kept going higher. what do you make of that? >> correct. i think any time you have a fast paced rally there will be those few investors who they get to that certain level and they say this is it, this is the selloff point. so from time to time you will see the pull backs. but as we all know, anything is possible, anything can happen. i think it's all out of the realm of possibility that we can keep going even higher. >> that is my next question. are you get mig clue that this ride is not over for investors? >> it's starting to look like that. i think a lot of investors
are pretty happy when you see the dow at a nice, ste steady incline over time. we had a fast rally at the end of the year. over the past few days it's been kind of sitting in the slow range. a lot of it due to the holiday season, the year changing over. but i think what we can see is that it can keep going higher. some of the volatilities in the marketplace are at an all time low and that shows you that there's not too much uncertainty with what investors are trying to do. >> we'll keep after watching. that was mike hikek. thank you for being on the show. >> thank you. you too. on the watch list, looking ahead to the first friday in january, the government releases the latest jobs report. taking a look back in 2009, it was a brutal year for the job market. more than four million americans lost their jobs this year. the worst losses took place in january. and gradually eased up towards snof. and experts are predicting that companies will start hiring again slowly in late
2010. and here's hoping that 2010 will be a much better year for jobs. angie. >> i hope so too. cheers to you. it's been wonderful working for you. thanks to the fine folks who make this possible everyday. and thanks to the audience. >> thank you very much. and angie, this is park willing white grape juice that we're drinking. >> we are non-alcoholic today. don't drink and drive. have a drisk new year. >> have a great new year.